What is Staircasing in Shared Ownership?
Staircasing is the process of buying additional shares in your Shared Ownership property. If you first purchased a 25% share of your home, you might later choose to buy another 25%, taking your ownership up to 50%. Over time, many shared owners can continue staircasing all the way up to 100%.
The more of your property you own, the less rent you’ll pay to your housing provider. At 100% ownership, you won’t pay rent at all, just your mortgage and any service charges or ground rent outlined in your lease.
How Do You Pay for Additional Shares?
When considering staircasing, it’s important to think about how you’ll fund the purchase of extra shares. The main options are:
1. Extending your existing mortgage
You may be able to borrow more money from your current lender to cover the cost of additional shares.
2. Remortgaging
Switching to a new mortgage deal with a different lender could give you access to better rates and allow you to release equity to buy extra shares.
3. Using your savings
If you’ve built up savings, you can use them to buy more shares without borrowing more money.
Good to know: You don’t always need a deposit when staircasing. The equity you’ve built up in your existing share often acts as a deposit. However, if you can save a deposit, you may be able to purchase a larger share.
Do Rent Payments Change When You Staircase?
Yes. As you purchase more of your home, the rent you pay to your housing provider decreases. Once you own 100% of your home, you’ll no longer pay rent.
However, it’s important to note:
- You may still have to pay service charges and ground rent.
- If you staircase to 100% in a house, you should check whether you can buy the freehold. If not, the property may remain leasehold even when you fully own it.
How Many Times Can You Staircase?
Previously, shared owners were typically limited to staircasing three times. But since 2022, many properties no longer restrict the number of staircasing transactions.
Always check your lease for specific terms. While unlimited staircasing is now common, each transaction usually comes with administration fees, so it often makes sense to staircase in larger chunks when possible.
Stamp Duty and Staircasing
Stamp Duty rules around staircasing can feel confusing. At the time of purchase, you usually have two options:
- Pay Stamp Duty upfront on the full market value of the property. If you do this, you won’t need to pay Stamp Duty again when you staircase.
- Pay Stamp Duty in stages, first on your initial share and again when you buy further shares. With this option, you won’t pay anything more until your ownership reaches 80% or above. Once you pass 80%, Stamp Duty applies to that transaction and any future ones.
Example: Buying a 25% share of a £500,000 property.
- One-off payment: A first-time buyer pays £3,750 in Stamp Duty, thanks to tax relief.
- Staged payment: A first-time buyer pays no Stamp Duty upfront but may face a bill later when staircasing to 80%+.
For peace of mind, you can use HMRC’s staircasing Stamp Duty calculator to estimate costs.
What If You Want to Sell Your Shared Ownership Home?
You don’t need to staircase to 100% ownership before selling your home. However:
- If you haven’t staircased to 100%, your housing provider usually has the right to market the property first.
- If you do own 100%, you can sell freely on the open market, potentially giving you more flexibility and choice.
Can You Sell Shares Back?
In rare cases, if you’re struggling with mortgage payments, your housing provider may agree to buy back some of your shares. This is called downward staircasing or flexible tenure. If you’re in this situation, speak directly with your housing association.
Why Choose PLS Solicitors for Staircasing?
At PLS Solicitors, we specialise in Shared Ownership and staircasing transactions. Our expert team can:
- Guide you through the legal requirements of buying additional shares.
- Advise you on Stamp Duty and ensure you don’t overpay.
- Work alongside your mortgage lender or broker to streamline the process.
- Help you navigate freehold vs. leasehold issues when staircasing to 100%.
We’re here to make staircasing simple, stress-free, and cost-effective, so you can focus on enjoying the benefits of owning more of your home.
Contact PLS Solicitors today to start your staircasing journey with confidence.
